Even as the largest U.S. defense contractor, Lockheed Martin (LMT) is learning that doing business with the federal government doesn’t make you bulletproof.
The company is now facing a class-action lawsuit from shareholder Muhammad Khan, who alleges that Lockheed misled investors about its ability to manage classified government programs.
The lawsuit was filed July 28 in the U.S. District Court for the Southern District of New York.
According to the complaint, Lockheed and several top current and former executives violated the Securities Exchange Act of 1934 by making false or misleading statements between Jan. 23, 2024 and July 21, 2025.
“The company is aware of the class-action shareholder lawsuit, and we intend to defend ourselves vigorously,” a company spokesperson said in response.
$80 million, then $1.7 billion, then another $1.6 billion
The suit centers on disclosures made in three consecutive earnings reports, beginning with Lockheed’s Q3 2024 update on Oct. 22.
That filing revealed an $80 million charge tied to a classified aeronautics program. The company blamed “higher than anticipated costs to achieve program objectives.” It also reported losses in its rotary and mission systems division.
The stock dropped 6.1% on the news, closing at $577.
In its Q4 2024 report, Lockheed stunned investors with $1.7 billion in additional pre-tax losses. The hits spanned its aeronautics and missiles and fire control segments.
Lockheed said it had conducted a “comprehensive review” of performance trends, technical challenges, and looming program milestones. That review triggered $555 million in charges for the same aeronautics program and another $1.3 billion for missile systems.
Shares sank another 9.2% after the release.
Then came Q2 2025. In July’s earnings report, Lockheed reported that profits had plunged nearly 80% for the quarter.
The company blamed $1.6 billion in fresh charges. That included a $950 million hit on the same classified aeronautics program, along with a $57 million loss tied to a Canadian government contract for maritime helicopters.
This time, the stock tumbled 10.8%.
Wall Street grows uneasy
Lockheed’s losses have rattled analysts who pressed CEO Jim Taiclet during the latest earnings call about internal oversight and execution.
Some questioned whether Lockheed’s internal controls were up to the task of managing high-risk government programs, according to the Financial Times.
“On one level you could argue this clears it all up, but on the other you could argue that it may be a roach motel, with more yet to emerge from under the bed,” wrote Nick Cunningham of Agency Partners in a note to clients.
Taiclet said Lockheed had strengthened internal oversight and replaced the review team on the troubled program, bringing in senior managers and technical experts from other divisions.
Lockheed Martin stock is down 10.5% year-to-date. But investor confidence may prove even tougher to recover.
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